App economy to get a big boost this holiday season

Apple, Google and Samsung won't be the only ones profiting from their tablet and smartphone sales this holiday season.

With these devices poised to be top selling gifts, there's sure to be a subsequent explosion in the number of apps downloaded for the mobile hardware, experts say.

"What we see is the mobile app economy is very consistent with many consumer-facing economies, like retail," said Craig Palli, chief strategy officer of Fiksu, a mobile app marketing firm. "It has a profound spike during the holidays."

During the fourth calendar quarter, twice as many apps are downloaded than in a typical quarter, Palli said. And most of the action in the fourth quarter comes from downloads happening in December, he said.

This is certainly true for Apple, which sees a surge in the number of apps downloaded from its app store in December. Last year, a record of more than 2 billion apps were downloaded during the month.

What were all those new users downloading? Mostly entertainment and gaming apps, of course, according to data from the mobile research firm Localytics. And that pattern is likely to continue, Palli said.

"The amount of volume in the gaming activity is absolutely going to spike," he said.

While new users will always download "perennial favorite" apps like Google Maps, Pandora and other core lifestyle applications, during the holidays there is dramatic growth in gaming, retail and holiday applications--like the ElfYourself app by OfficeMax, which recently merged with Office Depot.

Some of the mobile games that are trending in the Apple and Google app stores now include games made by companies like Rovio, King.com and Walt Disney. Some of the popular mobile apps that fall under the entertainment category include Netflix and Amazon's Instant Video app.

And because these popular apps are ranked high in the app store, they are likely to get a boost once people activate their new devices, Palli said.

The most successful apps this year, though, won't be the ones selling their program for an outright price. Instead, the most successful apps will be the ones that can be downloaded for free and then offer in-app purchases, which a user can buy to add to their user experience.

In fact, according to Fiksu's data about 90 percent of download activity is occurring with free apps, but that include the ability to make in-app purchases. Only, 10 percent of paid apps are being downloaded, Palli said.

"The app economy is driven by free downloads with in-app purchases and it makes sense," he said.

"If you give them the chance to take the app out for a test drive then they will gladly make an in-app purchases. But you can forget about the price point. They are not as willing to pay upfront for an app because they want to sample it first."